Home & Auto Cleaning Products Co.: Getting the Business in Shape to Sell

About the Company:
We were simultaneously introduced to CLEANCO by multiple business associates. The founders of CLEANCO had passed away, and the trustees were considering a sale of the business assets. Armed with a valuation of $500,000, the trustees interviewed several business brokers. The other business brokers suggested that they would “sell it on the internet.” We concluded that the business was not salable for an amount greater than asset value.

Challenges:
The business occupied the estate’s single largest asset, a commercial real estate property to which the business had not been paying “fair-market rent.” Analysis often reveals that the probable proceeds of a business sale are not sufficient to meet an owner’s needs. The trustees understood our analysis and questioned if there were not some way that the 30-year legacy of the business could be monetized.

Actions:
The trustees retained us to manage the restructuring of the company, which would include planning the outsourcing of all manufacturing operations and would allow the business to vacate the prime real estate.

During the process of running the company, we generated over $400,000 in cash in less than six months and we identified an opportunity to sell the company to multiple strategic buyers.

Results:
Our financial analysis demonstrated the value of the company to the strategic buyers, which resulted in an all cash sale of the company’s assets for $1.9MM in less than 10 months. Between the balance sheet cash and sale price, the estate beneficiaries realized over $1.5MM more than the original $500,000 valuation after paying our fees.